If You Are Going To Worry About Bitcoin's Energy Consumption, Worry About Server Farms Too — For More Than One Reason

from the terawatts-up? dept

Bitcoin has been much in the public eye recently. Most of the attention has been focused on the extraordinary rise in its price as measured against traditional currencies. But another aspect that has been exercising people is its energy usage, as a post on the Digiconimist site explains:

The continuous block mining cycle incentivizes people all over the world to mine Bitcoin. As mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a piece of it. Over the years this has caused the total energy consumption of the Bitcoin network to grow to epic proportions, as the price of the currency reached new highs. The entire Bitcoin network now consumes more energy than a number of countries, based on a report published by the International Energy Agency.

Currently, the country closest to Bitcoin in terms of electricity consumption, expected to be around 32 terawatt-hours this year, is Denmark. Some are predicting that by 2020, the Bitcoin system will use as much electricity as the entire world does today. Others aren’t so sure. Here’s Ars Technica:

When Bitcoin launched in 2009, each block came with a 50-bitcoin reward for the miner who created it. This figure is scheduled to fall by half every four years. It fell to 25 bitcoins in 2012 and 12.5 bitcoins in 2016. The reward will fall again to 6.25 bitcoins in 2020. When the mining industry’s revenue falls by half, its energy consumption should fall by the same proportion, since, if it didn’t fall, mining would become an unprofitable activity.

In any case, a new article in the Guardian reminds us that Bitcoin is just one part of a much larger energy consumption problem that the digital world needs to address:

The communications industry could use 20% of all the world’s electricity by 2025, hampering attempts to meet climate change targets and straining grids as demand by power-hungry server farms storing digital data from billions of smartphones, tablets and internet-connected devices grows exponentially.

It doesn’t really matter which of Bitcoin and the server farms will consume the most power in years to come — clearly both will be large, and both will require efforts to increase the availability of low-cost renewable energy so as to minimize their environmental damage. But there’s a fundamental way in which the two sectors differ.

Bitcoin is burning up the tera-watts to carry out meaningless calculations in order to win the prize of the next cryptocurrency block. Server farms need power in order to store detailed records of everything we do online, or with our connected devices, alongside masses of Internet of Things data streams. Whatever it is doing, Bitcoin is certainly not threatening our privacy, and arguably is enhancing it. But loss of privacy is exactly the risk arising from the use of massive server farms around the world.

The main reason why they are being built is to hold unprecedented quantities of personal data that can be analyzed and the results sold in some way — whether for advertising, or for other purposes. We constantly see stories about sensitive information being leaked on a massive scale, or legally acquired and then used in troubling ways. Alongside worthy concerns about the way that Bitcoin mining can degrade our physical world, we should worry more about how data mining can degrade our more personal space.

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Comments on “If You Are Going To Worry About Bitcoin's Energy Consumption, Worry About Server Farms Too — For More Than One Reason”

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28 Comments
Anonymous Coward says:

worse than art speculators

The thing I can’t understand is why Bitcoin, unlike all the many other cryptocurrencies out there, is going for such a disproportionally high price. What is it that makes one cryptocurrency worth so much more than another?

Whatever it is, I just hope there aren’t too many people who end up losing their house when the Bitcoin bubble finally bursts.

Anonymous Coward says:

Re: worse than art speculators

“What is it that makes one cryptocurrency worth so much more than another?”

Human feelings and desire. It’s just how it goes, the same reason people can panic and cause a stock market crash out of fear. If you “feel” like something is worth a million dollars you won’t let it go for for less and if you want something and are willing to pay someone at more more than they think it is worse you got a deal!

Anonymous Coward says:

Re: worse than art speculators

The thing I can’t understand is why Bitcoin, unlike all the many other cryptocurrencies out there, is going for such a disproportionally high price.

In proportion to what?

What is it that makes one cryptocurrency worth so much more than another?

Same thing that makes the US dollar worth more than the Australian or Zimbabwe dollar. Basically, people think they’ll be able to get more from a US dollar in the future—or more from Bitcoin than Litecoin. None are backed by gold or anything else, so there’s no objective measure. (US dollars can be used to pay US taxes, but that’s not the main reason people use them—lots of non-US people use US dollars too.)

Anonymous Coward says:

> Bitcoin is burning up the tera-watts to carry out meaningless calculations in order to win the prize of the next cryptocurrency block.

I’ll point out some similar wastes, shall I?

Ultimately meaningless World of Warcraft…
Ultimately meaningless instant responses to trivial comments…
Ultimately meaningless recordings of phone call metadata….

Oh, wait…

Roger Strong (profile) says:

But... but... that means...

…the major ISPs with their monopoly pricing, low bandwidth and usage caps are protecting the earth from the massive energy waste – and privacy loss – of giving everyone unfettered access to those server farms!

Net Neutrality would have led to a vast number of content providers needing server farms, rather than a select few. Ajit Pai is a superhero for defeating this evil.

Good to know.

/s?

Rich Kulawiec (profile) says:

Imagine a different kind of Internet

Imagine, for a moment, that connectivity is ubiquitous and cheap — and more along the lines of a mesh model than hub-and-spoke.

This removes rather a lot of the need for data centers, because computing resources can be distributed and can use on-site power generation: solar, wind, and even low-tech ones like bicycle-powered generators. The price of computing hardware keeps falling as the performance keeps going up, and projects like the Raspberry Pi provide an assortment of physically small and power efficient computers that can handle a surprising amount of work. An awful lot of folks could build their own home data center from pluggable components rather cheaply.

This is the kind of distributed, empowering, environmentally-friendly Internet that some of us envisioned a long time ago. It’s not without its technical problems, but there are solutions already available for most of those. What it’s missing is the one thing I asked you to imagine: cheap, ubiquitous connectivity. And the barrier to that sits in the offices of the massive ISPs and their political servants — because while this is an Internet model that’s still profitable for them, it’s not obscenely profitable.

Anonymous Coward says:

Re: Imagine a different kind of Internet

This removes rather a lot of the need for data centers, because computing resources can be distributed and can use on-site power generation: solar, wind

Many data centers already run on renewable power. Distributed computing would reduce power wasted in grid transmission losses, but wouldn’t significantly affect the power needed to run computation. Of course, if we were being asked to track ourselves, with our own electricity, and send the data to advertisers, we might be less willing to do some of these computations.

even low-tech ones like bicycle-powered generators.

I tried that at a science center, and it’s a lot of work for not much electricity. The only practical uses I see are running bicycle accessories, supplying emergency power when the grid is down, and powering stuff in off-grid areas when no solar/battery power is available. Not very useful in developed countries except when camping.

Roger Strong (profile) says:

Re: Re: Imagine a different kind of Internet

Yup. A bicycle-powered generator is only suitable in an emergency that no-one prepared for, even in a third-world country. From a conversation on the subject on one of the sci.space Usenet groups a long time ago:

I had a US Navy diver on an ergometer putting out over 800 Watts for 20 minutes, but real humans can generate about 200 W for extended periods. That’s a KWHr every 5 hours, for a retail value of 12 cents. It’s just plain silly to consider the economic reality of human power.

Anonymous Coward says:

Re: Imagine a different kind of Internet

I for one love that vision. But the mesh networking won’t by itself remove the needs for serverfarms.

We need this sort of distributed thinking both at the link layer & the application layer as server farms are serving most the demand in both places.

By the way, go DHTs! Go cryptography!

Ninja (profile) says:

I’d say I agree with Ars. The consumption will peak higher than it is today and then simply fall. And there’s the fact that mining will cease when it reaches the 21 million cap. Another thing is, the energy consumption per processing power ratio has been steadily falling over years so there is that as well. I also don’t agree with the fact that it’s useless. In the long run I believe that we will reach a point where cryptocurrencies will work their way into mainstream in an usable form (bitcoin as it is today is just used like storing gold but with large signs of tulips).

As for the server farms I don’t quite know what to think about it. I don’t think we can fully decentralize everything (except maybe you can have several server farms all around decentralizing stuff among them) so we will have to live with them. I mean we have the Internet Archive for instance. Do we really think it can be run without any massive server farm? What I believe we can do is make data collection rational and storage/processing more efficient. Of course I don’t see it happening any time soon.

MyNameHere (profile) says:

Re: Re: Re:

It’s an interesting question, but one that resolves itself fairly well. The difficulty to build new blocks is based in no small part on the amount of mining going on. There is a target goal for new blocks of 600 seconds, and every 2016 blocks the system compares it’s previous choice of difficulty and the amount of mining power at the time with the results of the previous 2016 blocks and the current mining availability.

Bitcoin rewards will drop (in about 2 years) by half, and then half again a year or two later. As the reward level drops, the income from mining drops, and thus fewer people mine. There is a point where it’s not financial viable to mine.

So today’s billions of giga hashes pretty much all disappear where people can no longer afford to do it.

Now interesting, if they power drops too much, the cost per transaction may go up. The “gas” as it were would become the prime source of income, and as such, would have to be adjusted to a level that keeps enough miners in the game to process transactions.

Mining has to continue for transactions to happen, even through they will no longer be mining for very much.

Paul Brinker (profile) says:

Re: Re: Re: Re:

Mining is in no small part directly related to the cost of electricity. As long as bitcoin prices are north of 10k all one needs is a source of cheap / stolen power to run a rack of miners.

The flaw in your logic above is that mining was “profitable” at around $300 per bitcoin as it was enough to cover the cost of electricity. When your looking at $10k per coin you’re so far out of sync with the cost to produce a coin as to be somewhat crazy.

It’s a feedback loop where the price floor is set by the lowest cost power supplies as long as the current value is higher than that, more miners will be added to the network.

Anonymous Coward says:

Re: Response to: Ninja on Dec 14th, 2017 @ 4:41am

It is true that we can’t peer-to-peer-ify everything (simply decentralizing/federating doesn’t make a difference as people gravitate towards the same providers, except e.g. for printers). For example we know assigning sites human readable names can only be solved with a central service or a blockchain which in order to function can’t service as much demand. I leave it to you to decide which is better.

However most services serve the purpose of a) publishing information to be read by whoever wants it and/or b) sending messages to named recipients. In both cases modern peer-to-peer technology can more than handle it even without blockchains, and reduce the issues pointed out by this excellent article whilst improving several other aspects of the Internet including efficiency. It can even help (but not replace) The Internet Archive’s difficult job by both taking load off them & making it easier.

True not everything can be made to work without server farms, and it is worth supporting the OpenCompute project to minimize those problems. But most things can and should work without those server farms.

Anonymous Coward says:

burning up the tera-watts to carry out meaningless calculations

No.

Those calculations have a quite definitive meaning. They mean that there is an alternative scarcity model. This compares to paper fiat currencies whose scarcity model is constrained primarily by the self discipline of corrupt governments who declare things to be so, and expect fear of their military might to make those lies true.

These watts reflect a practical implementation of a complete shift in the theory of economics. Satoshi Nakamoto has changed econ in a way that dwarves anything Madison of Nash ever did.

That is what those watts mean.

Anonymous Coward says:

It all depends on where you're mining.

Take a look at http://bitcoinist.com/stay-warm-winter-profit-using-bitcoin-mining-heat-home-free/ for a rather interesting use of Bitcoin. Yes, mining Bitcoin uses electricity. And as the above link shows, it also generates heat as a waste product. So why not use that heat to warm your home? Overall effect is a rather expensive “electric heating” system for your home that actually pays you. And the concept doesn’t have to be limited to Bitcoin. Which is better for the environment? Passing electricity through giant resistors to generate heat? Or using electricity to operate computers solving problems and at the same time, using the waste heat generated to heat your home? In either case, you’re gonna use the electricity anyway.

Anonymous Coward says:

Re: It all depends on where you're mining.

So why not use that heat to warm your home?

Some areas like Québec use a lot of electric heating. It would be great to replace every electric baseboard heater in those areas with one that does useful work (Bitcoin or other calculations). It doesn’t help in the summer, so we should still try to reduce the energy usage. There are various ideas like proof-of-stake but no fully-developed workable systems yet.

Anonymous Coward says:

Also compare with "legacy" systems

Bitcoin proponents claim the currency will be able to replace many existing systems—banks, money transmitters, land registries, etc., depending on who’s making the claim. How much power do these businesses use? There are hundreds of physical banks in my city, tens of finance-related skyscrapers, and it’s not a world finance hub. How much power is used for the worldwide tracking of (non-Bitcoin) money now? We should know this before claiming 32 TWh is too much energy.

Tim M (profile) says:

Internet services useful

Sure, lots of server farms power advertising networks and suck our privacy. But many others power services that define the internet for many people. BTC on the other hand has limited practical uses now because of its volatility and transaction cost/latency issues. So it appears to me that the terawatt-hours for server farms serve society but that for BTC seems to only serve those who profit from speculating in bubbles.

Adam says:

This is actually a big problem to think about. You are right that the share of remuneration is decreasing, and the share of energy consumption for cryptocurrency is increasing, and this seems to have side effects. Of course, people are now finding new technologies and improving alternative energy sources. Although judging from the article about new trading platforms – https://gocryptowise.com/blog/best-binance-alternatives/ then people don’t really care about these issues right now

Lineagerqq (profile) says:

Cryptocurrencies are something that I have been trading for some months now. In this game, you have to estimate when a certain currency’s price will rise. The entire procedure consists of analyzing and predicting the increase of a currency’s value. In the last several weeks, I’ve found something really valuable – https://safetrading.today/traders/bitcoin-signals/ Bitcoin Growth Predictor allows you predict the growth of bitcoin and make a profit. I’ve been using it for a few days now and I’m quite happy with it. It’s worth a try!

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